On May 11, 2023, Fitch Ratings announced that it has upgraded the Commonwealth of Kentucky’s Long-Term Issuer Default Rating (“IDR”) to ‘AA’ (from ‘AA-‘). Fitch Ratings has also upgraded Kentucky’s annual appropriation-backed lease revenue bonds and other debt linked to the IDR to ‘AA-‘ (from ‘A+’). The ‘AA-‘ rating on the Commonwealth’s appropriation-backed debt reflects a slightly elevated risk of non-payment given the appropriation pledge. The Rating Outlook for Kentucky is ‘Stable.’

According to Fitch Ratings, the upgrade of Kentucky’s IDR reflects several key factors:

  • Better funding practices related to long-term liabilities, particularly public pension plans
    • Fitch believes the shift to making full actuarially-determined annual pension contributions has enhanced Kentucky’s budgetary flexibility and that these improvements are sustainable
  • Material improvements to Kentucky’s fiscal reserves since 2020, as a result of improved budgetary discipline, and a post-pandemic surge in tax collections, which are now in their third year
  • More disciplined budgeting practices have allowed Kentucky to use surplus revenues to boost state fiscal reserves, increasing its overall financial resilience

In general, credit rating is a measure of a state’s ability to pay debts and the overall health of its economy. This is the first state-level credit rating increase Kentucky has received in 13 years, and is the first-ever state-level upgrade by Fitch Ratings since it began rating Kentucky in 2014. As Governor Andy Beshear proclaimed, “This is one more positive sign that Kentucky’s economy is booming and that our fiscal house is in order.”


This information is general in nature and is not intended to provide investment, accounting, tax or legal advice. It is not intended to represent a recommendation or solicitation related to any particular investment, security or industry sector.

Independent rating services (such as Standard & Poor’s, Moody’s and Fitch) assign ratings, which generally range from AAA (highest) to D (lowest), to indicate the credit worthiness of the underlying bonds in the portfolio. Where the independent rating services differ in the rating they assign to an issue, or do not provide a rating for an issue, the highest available rating is used in calculating allocations by rating.

Mutual fund investing involves risk; loss of principal is possible. Investments in bonds may decline in value due to rising interest rates, a real or perceived decline in credit quality of the issuer, borrower, counterparty, or collateral, adverse tax or legislative changes, court decisions, market or economic conditions. State-specific fund performance could be more volatile than that of funds with greater geographic diversification. Past performance does not guarantee future results.

Before investing in any mutual fund offered by Aquila Group of Funds, carefully read about and consider the investment objectives, risks, charges, expenses, and other information found in the Fund’s prospectus. The prospectus is available from your financial professional, by clicking here, or by calling 800-437-1020.